© 2006 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Ryerson 8 C H A P T E R: E I G H T Decision Making and Creativity

2 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Decision Making at Radical Radical Entertainment founder Ian Wilkinson (third from right) meets with employees every week to reinforce the Vancouver-based games developer’s emphasis on creative decision making and employee involvement. Ron Sangha

3 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Decision Making Defined Conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs. Ron Sangha

4 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Rational Choice Decision Process

5 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Problem Identification Process Problems and opportunities are not announced or pre-defined  need to interpret ambiguous information Problem identification uses both logical analysis and unconscious emotional reaction during perceptual process  need to pay attention to both logic and emotional reaction in problem identification

6 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Famous Missed Opportunities A famous missed opportunity for many Hollywood studios: Nia Vardalos’s comedy screenplay about her Greek-Canadian family in Winnipeg was rejected by almost everyone, yet it eventually became the top-grossing independent film in history and was nominated for an Oscar. CP/Everett Collection

7 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Problem Identification Challenges 1.Influence from others ‘frames’ the situation 2.Coping mechanisms block out negative information 3.Opportunities that differ from mental models become missed opportunities 4.Faulty diagnostic skills Decisiveness short circuits problem identification Defining problems in terms of solutions CP/Everett Collection

8 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Identifying Problems Effectively Be aware of perceptual and diagnostic limitations Understand mental models Discussing the situation with colleagues -- see different perspectives CP/Everett Collection

9 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e ProcessingInformation Evaluation Timing Rational: People can process all information Rational: Choices evaluated simultaneously Goals Rational: Clear, compatible, agreed upon OB: Ambiguous, conflicting, lack agreement OB: People process only limited information OB: Choices evaluated sequentially more Making Choices: Rational vs OB Views

10 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Info Quality Decision Objective Rational: People rely on factual information Rational: Maximization -- the optimal choice Standards Rational: Evaluate against absolute standards OB: Evaluate against implicit favourite OB: Rely on perceptually distorted information OB: Satisficing -- a “good enough” choice Making Choices: Rational vs OB (con’t)

11 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Emotions and Making Choices 1.Emotional marker process forms preferences before we consciously think about choices 2.Moods and emotions influence the decision process affects vigilance, risk aversion, etc. 3.We ‘listen in’ on our emotions and use that information to make our choices

12 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Intuitive Decision Making Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning Intuition as emotional experience  Gut feelings are emotional signals  Not all emotional signals are intuition -- uses situation specific templates of tacit knowledge Intuition as rapid unconscious analysis  Uses action scripts -- preprogrammed decision and behavior routines

13 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Making Choices more Effectively Systematically evaluate alternatives Balance emotions and rational influences Scenario planning

14 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Escalation of Commitment Escalation of commitment occurred when the British government continued funding the Concorde supersonic jet long after it ’ s lack of commercial viability was apparent. Some scholars refer to escalation of commitment as the “ Concorde fallacy. ” © Corel Corp. With permission

15 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Escalation of Commitment Causes 1.Self-justification 2.Prospect theory effect 3.Perceptual blinders 4.Closing costs © Corel Corp. With permission

16 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Evaluating Decisions Better 1.Separate decision choosers from evaluators 2.Establish a preset level to abandon the project 3.Involve several people in the evaluation process

17 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Employee Involvement Defined The degree to which employees influence how their work is organized and carried out  Level of control over decision making  Different levels and forms of involvement

18 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Employee Involvement Model Potential Involvement Outcomes Contingencies of Involvement Employee Involvement Better problem identification More/better solutions generated Best choice more likely Higher decision commitment

19 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Contingencies of Involvement Knowledge Source Decision Commitment Employees have relevant knowledge beyond leader Employees would lack commitment unless involved Risk of Conflict Norms support firm’s goals Employee agreement likely Decision Structure Problem is new & complex (i.e., nonprogrammed decision) Higher employee involvement is better when:

20 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Preparation Incubation Insight Verification Creative Process Model

21 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Characteristics of Creative People Above average intelligence Persistence Relevant knowledge and experience Inventive thinking style

22 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Creative Work Environments Learning orientation  Encourage experimentation  Tolerate mistakes Intrinsically motivating work  Task significance, autonomy, feedback Open communication and sufficient resources Team competition and time pressure have complex effect on creativity

23 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Creative Activities Review abandoned projectsReview abandoned projects Explore issue with other peopleExplore issue with other people Redefine the Problem StorytellingStorytelling Artistic activitiesArtistic activities Morphological analysisMorphological analysisAssociativePlay Diverse teamsDiverse teams Information sessionsInformation sessions Internal tradeshowsInternal tradeshows Cross- Pollination

© 2006 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Ryerson 8 C H A P T E R: E I G H T Decision Making and Creativity

© 2006 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Ryerson 8 C H A P T E R: E I G H T Solutions to Creativity Brainbusters

26 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Double Circle Problem

27 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Nine Dot Problem

28 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Nine Dot Problem Revisited

29 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Word Search FCIRVEEALTETITVEERS

30 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Burning Ropes One Hour to Burn Completely After first rope burned i.e. 30 min.

© 2006 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Ryerson 8 C H A P T E R: E I G H T Chapter 8 Extras

32 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e HighMediumLow Levels of Employee Involvement High involvement  Employees have complete decision making power (e.g., SDWTs) Full consultation  Employees offer recommendations (e.g., gain sharing) Selective consultation  Employees give information, but don’t know the problem